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De Ruyter’s resignation from Eskom a ‘major blow’ for power utility’s reform, warn business and investment experts

De Ruyter’s resignation from Eskom a ‘major blow’ for power utility’s reform, warn business and investment experts
Neesa Moodley, Georgina Crouth and Ray Mahlaka
By Neesa Moodley, Georgina Crouth and Ray Mahlaka
14 Dec 2022
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The timing of André de Ruyter’s departure as the Eskom CEO is arguably terrible as SA is in the throes of unprecedented and sustained levels of rolling blackouts. There will also be a vacuum in Eskom’s top leadership structure.

The resignation of André de Ruyter as the Eskom group CEO has shocked business, investment and energy experts, who say it is a blow to efforts at reforming the power utility’s operations and ending rolling blackouts that in 2022 have reached their worst levels yet.

De Ruyter, who has been in the Eskom top job for three years, is the 10th CEO to leave Eskom in 10 years.

Eskom confirmed De Ruyter’s resignation in a media statement on Wednesday, but didn’t provide reasons for his move, saying only that he would serve a notice period until the end of March 2023. The power utility is “urgently” embarking on a search for De Ruyter’s successor.

The timing of De Ruyter’s departure is arguably terrible as SA is in the throes of unprecedented and sustained levels of rolling blackouts, with Eskom placing the country under Stage 6 in early December due to more breakdowns at its power stations. It was the fourth time in 2022 that Eskom had pushed rolling blackouts to Stage 6.

De Ruyter’s departure is also worrying because there will be a vacuum in Eskom’s top leadership structure, with the power utility not having a permanent CEO, head of generation (in charge of power plants), and soon no permanent chief operating officer (COO). Jan Oberholzer, the Eskom COO, is set to retire in April 2023.

Business Unity South Africa (Busa), SA’s largest business organisation, has described De Ruyter’s resignation as a “major blow for Eskom” and “efforts to address the energy crisis” that imperil any chances of the country’s economic recovery and development. At the same time, Busa CEO Cas Coovadia said De Ruyter’s resignation is “hardly surprising, given the irresponsible comments by some in government and some other sectors”.

In other business circles, there have been growing calls for De Ruyter to quit or be fired, with the Black Business Council repeatedly calling for him to resign and making him the scapegoat for rolling blackouts.

De Ruyter’s leadership trashed by Mantashe


In recent days, De Ruyter’s leadership has come under intense scrutiny and been trashed by Mineral Resources and Energy Minister Gwede Mantashe, who said Eskom was “actively agitating for the overthrow of the state” through the blackouts.

“Eskom, by not attending to rolling blackouts, is actively agitating for the overthrow of the state”, Mantashe was quoted as saying in a News24 article.

Mantashe has previously launched similar attacks against Eskom’s management (including De Ruyter). President Cyril Ramaphosa, Public Enterprises Minister Pravin Gordhan (the custodian of Eskom’s operations), and Finance Minister Enoch Godongwana didn’t respond to Mantashe’s allegations and failed to publicly support De Ruyter.

Chris Yelland, an energy analyst and managing director of EE Business Intelligence, said De Ruyter not receiving public support from his political principals might have been the last straw for him, pushing him to resign.

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“Without a single word of public support from the President, the finance minister, the minister of the Department of Public Enterprises and the Eskom board chairman after the attack by Minister Gwede Mantashe accusing De Ruyter of treason, I would expect nothing less than that De Ruyter should resign in disgust,” said Yelland.

He argued that what worsened De Ruyter’s resignation is that it came when the newly appointed Eskom board was still familiarising itself with the power utility’s operations.

Read more in Daily Maverick: “Pravin Gordhan announces new lineup of full 13-member Eskom board — with some expertise”

The new board was mandated by Gordhan to achieve a 75% energy availability factor (EAF) for the power utility to end rolling blackouts. An EAF is a measure of Eskom’s available power plants to generate and dispatch energy. Yelland said that by Wednesday, Eskom’s EAF had fallen to 51%, which heightens the chances of SA being in a higher stage of rolling blackouts for a while.

“This is not a good time to lose the driver,” said Yelland, referring to De Ruyter’s resignation.

De Ruyter’s report card


Peter Attard Montalto, the head of capital markets research at research firm Intellidex, has a glowing report card on De Ruyter’s performance as Eskom CEO.

“André will probably be scapegoated for the current rolling blackouts, and we will probably have a new CEO coming in with promises to fix it, but I think we need to call a spade a spade when we see it.

“I think André did ultimately everything possible in that role, given the financial incapacity constraints. Rolling blackouts are going to get worse next year regardless of who you put in that role,” said Attard Montalto.

Over the past two years, De Ruyter’s time at Eskom has been premised on increasing the maintenance of ageing power stations, helping to split Eskom into three parts (generation, transmission and distribution), and leasing land that the power utility owns to independent power producers to start generating renewable energy that can be fed to the grid. 

“De Ruyter has also been a champion for the energy transition of the whole energy system, rather than only the narrow interests of Eskom, which is critical for SA. The risk with him going is further destabilising Eskom, if a wider exodus ensues,” said Dr Stuart Theobald, the executive chairman of Intellidex and a colleague of Attard Montalto.

De Ruyter’s replacement


The big concern is who will take over after De Ruyter. Being the Eskom CEO is arguably the most difficult job in SA as the CEO not only has to fulfil the fiduciary duties of leading with integrity, but must also be brave enough to push back against populist ideas of how to manage the power utility.

“I’m sure it’s going to take many months to recruit to replace these positions [not only De Ruyter, but others as well], which leaves Eskom and SA in a position of extremely high risk,” said Yelland.

Besides De Ruyter, no one else wanted the Eskom top job. When De Ruyter was in the Eskom recruitment process in 2019, as many as 27 top black executives were approached to apply for the job. All declined.

Busa’s Coovadia said the next Eskom CEO, “must have the skills and capability to continue all efforts to reduce rolling blackouts, accelerate the Eskom restructure, tackle ongoing corruption and sabotage, and work with business to diversify the energy generation and distribution environment, with the focus on cleaner energy”.

Intellidex’s Theobald said: “The key is who comes next. Will they pursue the conclusion of Eskom restructuring with vigour? Will they prioritise the interests of SA over the narrow interests of the utility? These will be key.” DM/BM

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